Aon Creates $350M of Cyber Capacity, Launches New Solution for Silent Cyber

September 7, 2018

Aon plc is continuing its investment in cyber by creating US$350 million of new reinsurance capacity and launching its silent cyber* solution.

Aon’s silent cyber solution is designed to partner with carriers in their journey to identify, quantify and mitigate the silent cyber risk by providing a clash solution** to reinsure the exposure in the interim period. Where the carrier chooses to provide affirmative cyber coverage going forward, Aon can arrange a reinsurance solution for that cyber exposure to sit across multiple lines of business.

The goal of the solution is to help insurers obtain more clarity on their cyber exposures with the option to exclude or recognize the exposure in each portfolio, and then evolve their reinsurance protections for cyber accordingly, said Aon in a statement. This will create more efficient reinsurance structures, while empowering clients to strategically underwrite cyber risk across all lines of their portfolios with greater certainty, the broker continued.

The solution is supported by an analytical, end-to-end process to help insurers:

  • Identify their silent cyber exposures through wording and threat analysis
  • Quantify their exposures using bespoke scenarios developed by Aon’s dedicated Cyber Analytics team, insights and scenarios from cyber security specialists within Aon’s Cyber Solutions, and cyber modeling provided by partner Guidewire and its Cyence Risk Analytics product, to establish credible risk levels
  • Protect that silent exposure with a cyber clash reinsurance product
  • Establish appetite and methodology to underwrite, price and reinsure affirmative cyber across multiple lines of business

Working with key reinsurers in Bermuda, London and Europe, Aon has sourced the US$350 million of capacity prior to launch, Aon continued.

Aon’s silent cyber solution reinforces the firm’s commitment to innovation in this space and follows last week’s announcement that Luke Foord-Kelcey has been appointed global head of Cyber Innovation for its Reinsurance Solutions business.

Over the last 18 months, a combination of regulatory attention and criticism from regulators – including reports by the Prudential Regulation Authority (PRA) and European Insurance and Occupational Pensions Authority (EIOPA), as well as the far-reaching ransomware attacks NotPetya and Wannacry – have raised awareness of how cyber incidents can affect multiple lines of business, Aon said.

Carriers are now under increased pressure to identify, analyze and mitigate their exposures. However, challenges include locating the exposure, and developing scenarios that are both realistic and relevant to that carrier, Aon explained.

“Our process-led and forward-looking approach to assessing, quantifying and transferring silent cyber will lead to improved coverage, pricing and capacity through robust, modelled results and strong reinsurer partnerships,” commented Foord-Kelcey. “But most importantly, it is about how we end the ‘silence’, strengthen the cyber re/insurance market and make it future-proof with more transparency, opportunities for growth and enhanced protection across the value chain.”

*Silent or non-affirmative cyber refers to potential cyber exposures contained within other lines of business that do not explicitly exclude cyber as a peril, nor expressly include cyber coverage.

**According to the International Risk Management Institute, clash coverage is a type of reinsurance designed to protect an insurance company from the loss of its normal reinsurance recoveries when it is faced with multiple claims from multiple insureds arising out of the same catastrophe and where its reinsurance does not fully reimburse the insurer for these related losses.

Source: Aon

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